Buy KNR Constructions; target of Rs 228: HDFC Securities

HDFC Securities' research report on KNR Constructions

KNRC delivered a stellar 4QFY17 net profit beat, 32.3% ahead of our estimates. This was achieved despite a loss of Rs 30mn from JV, and other income reversal of Rs 110mn. The B/S is healthy, with standalone net debt at Rs 1.21bn (net D/E at 0.13x, -0.01x adjusting for promoters’ loan of Rs 1.2bn).

Outlook

KNRC continues to surprise on earnings in many previous quarters, and has outperformed its own growth guidance. Debtor’s days remain the best in the industry at 38 days. We rate KNRC as BUY with an SOTP of Rs 228/sh on 18x Mar-19E EPS.